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What Is a No-Fault State?

Dawn Pinnisi

November 6, 2024

If you’ve ever been in a car accident or wondered how insurance claims work, you may have heard the term “no-fault state.” In simple terms, this means that each driver must submit claims to their own coverage company after an incident, regardless of who was responsible for it. But how exactly does this system work, and what does it mean for drivers in Paramus? At Varcadipane & Pinnisi, P.C., we aim to simplify these laws so you can understand your rights and responsibilities under New Jersey’s no-fault system.

In this blog, we’ll explain the basics, how compensation works, and what options you have after a collision.

What Does No-Fault State Mean?

It means that each driver’s insurance covers their medical expenses and certain other losses after an accident, regardless of who caused the crash. This approach aims to expedite the claims process and alleviate pressure on the court system. Instead of having to determine fault before covering basic costs, the no-liability system guarantees that users receive timely remuneration through their own insurers.

The intent behind this law is to make the process of obtaining resolutions quicker and less adversarial. However, it generally does not cover non-economic damages—like pain and suffering—unless your injuries meet a certain threshold, which might vary by state and often depend on the injuries’ severity.

To learn more about how these limits work, visit the New Jersey Department of Banking and Insurance’s Auto Insurance Guide.

How a No-Fault System Works

In an uncontested security system, your own coverage policy serves as the primary way to recover costs following a collision. This type of insurance, called Personal Injury Protection (PIP), covers medical expenses, lost wages, and other injury-related costs up to a specific limit. Here’s a breakdown of how it usually works:

  1. Immediate coverage for medical expenses: After an accident, your PIP insurance kicks in to cover necessary medical treatments. There’s no need to wait for a determination of liability, which is one of the major benefits of this system.
  2. Limited payment for non-medical costs: Your PIP usually does not compensate for non-economic damages like physical and emotional distress unless your injuries are critical.
  3. Reduced lawsuits: The system limits the ability to sue another driver unless certain conditions are met. For instance, in many states, you can only file a lawsuit for pain and suffering if your injuries meet a “serious injury” threshold, such as significant disfigurement or permanent disability. The guide to no-fault insurance provides an in-depth explanation of these thresholds.

Although this system offers several benefits, it also has its drawbacks. For example, if you sustain serious injuries in an accident, your medical expenses might surpass the coverage provided by your PIP policy. In such situations, you may have the option to pursue additional compensation through a personal injury lawsuit.

Can I Seek Compensation in a No-Fault State?

Yes, you can seek remuneration in a no-fault state, but it depends on the harshness of your injuries and other circumstances. As mentioned earlier, no-fault insurance covers your basic medical expenses and lost wages, but if your lesions are particularly severe, you may be entitled to additional remuneration.

In New Jersey, the law allows drivers to step outside the faultless system and pursue legal action if they suffer from what is legally defined as a “serious injury.” This could include:

  • Permanent injury (such as a significant disfigurement or disability)
  • Loss of a body part
  • Significant scarring
  • Loss of a fetus
  • Death

If you fall into one of these categories, you may have the right to file a personal injury claim against the responsible driver to recover additional damages. To verify you understand your options fully, it’s important to consult with an experienced car accident attorney who can assess your case. You can also find additional background information on uncontested coverage at The Insurance Information Institute’s resource.

Is New Jersey a No-Fault State?

Yes, New Jersey is a no-fault state, which means that if you’re involved in a car incident in Paramus, your own coverage will usually handle your immediate medical expenses through PIP. Nonetheless, New Jersey’s system is somewhat unique because it allows drivers to choose between a “limited right to sue” or an “unlimited right to sue” when purchasing auto insurance. This choice directly affects your ability to seek compensation beyond what is covered by PIP.

  • Limited right to sue: This option allows you to sue the responsible driver only for severe injuries, such as permanent damage or disfigurement.
  • Unlimited right to sue: This option allows you to sue the at-fault driver for any injury, regardless of the seriousness. It typically comes with higher coverage payments, but it provides greater flexibility in case of an incident.

Most drivers in the state opt for the limited right to sue to keep premiums lower, but knowing the trade-offs involved is essential.

Recover Your Losses After a Car Accident

If you’re a driver in Paramus and have questions about how New Jersey’s no-fault insurance laws affect your rights after an accident, Varcadipane & Pinnisi, P.C. is here to help. Our attorneys can explain your options and guarantee you receive the settlement you deserve. Contact us online for more information.

Dawn M. Pinnisi

Dawn M. Pinnisi is a distinguished attorney with a track record of excellence in advocating for victims of injury and negligence. Dawn is a Founding Partner of the Firm, a member of the Million Dollar Advocates Forum, and has been awarded by the National Trial Lawyers.

University: J.D. Brooklyn Law School

Bar Number: 33771999

Locations: New Jersey and New York.

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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by Founding Partners, Jeffrey W. Varcadipane & Dawn M. Pinnisi, with more than 40 years of combined legal experience as personal injury attorneys.

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